Banks have gone from strength to strength in the last two years. Enormous provisions were set aside at the start of COVID that ultimately were not required. This means banks are awash with cash. Conversely, people in general are struggling. Inflation has sky rocketed, energy prices are in the stratosphere and wage growth is relatively stagnant. This is the economic reality of today.
Now let’s do a thought exercise – what would you do about it? If you said cut taxes on banks and raise NI then you could be insane enough to get a job in the cabinet.
Seriously, what the hell is going on?
14 million people are on the breadline in this country. They can barely survive from month to month and the situation is only getting worse as inflation, interest rates and energy prices conspire to grind the hard off into submission. You would have to be a raging psychopath to think that raising National Insurance is a good idea right now. Especially since it was an explicit manifesto commitment that this Government would not raise NI. It says it in black and white!
There is a real chance that this could send people over the edge at a time when it just didn’t need to be done. But what about COVID? What a good question! Surely, the enormous cost of COVID needs to be paid for somehow? Surely the government wouldn’t do something mind-blowingly stupid like increasing tax for the hardest off group in society whilst instituting unnecessary tax cuts elsewhere?
Johnson is increasing tax on the hardest off group in society whilst cutting taxes for Banks
I want to make it clear at this point that I am not about to start “bashing the bankers”. Financial Services is a vital part of the UK economy and, for the most part, pays it’s fair share to the exchequer. That being said, Banks have done extraordinarily well during the pandemic. Interest rate rises are also a massive boon for the industry and will further increase profits. Worse still, the current Bank surplus profit tax rate has been priced in and is manageable. No serious player in the industry was publicly calling for it to go ahead. No one.
Yet Boris and Sunak did it. They progressed with a £4bn tax cut for a group that, frankly, do not need it. Whilst this doesn’t completely offset the NI tax rise haul of £12bn, it is a sizeable whack. More to the point, the residual £8bn is more than dwarfed by £37bn wasted on Test and Trace. It’s also eerily close to the £5bn lost on BBLS fraud; an outrageous waste of money that was also totally unnecessary and wouldn’t have happened if even the most basic fraud checks were undertaken.
I have tried to give this the benefit of the doubt, but at this point it’s like a toddler who’s managed to log into their parents Amazon account. Except the figures they are playing around with are in the billions and the impact when the credit card bill arises is people starving to death.
It is difficult to tell if it’s incompetence, corruption or self interest that drives Johnson’s growing list of failings. In this case, I fear it may be all three.